30 Nov Disney’s Dark Days
The following commentary/analysis is one I wrote in my capacity as a senior fellow at “the nation’s oldest consumer protection agency,” Consumers Research, where, among other things, I compile a weekly letter for public pension-fund managers. I am sharing it here today because I thought it might be useful to some of you.
Disney Admits It Screwed Up. But Now What?
By now, you probably know that Disney’s most recent 10k filing with the SEC contained, among other things, an explicit admission of failure to meet consumer expectations. In brief, the company and its management conceded that it doesn’t know its customers and, as a result, has pursued policies that have negatively impacted its bottom line:
We face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products, which impact demand for our entertainment offerings and products and the profitability of any of our businesses. Our businesses create entertainment, travel and consumer products whose success depends substantially on consumer tastes and preferences that change in often unpredictable ways. The success of our businesses depends on our ability to consistently create compelling content, which may be distributed, among other ways, through broadcast, cable, theaters, internet or mobile technology, and used in theme park attractions, hotels and other resort facilities and travel experiences and consumer products. Such distribution must meet the changing preferences of the broad consumer market… Generally, our revenues and profitability are adversely impacted when our entertainment offerings and products, as well as our methods to make our offerings and products available to consumers, do not achieve sufficient consumer acceptance. Further, consumers’ perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social goals, often differ widely and present risks to our reputation and brands.
As you may also know, this filing was followed by an all-hands employee forum, hosted just a few days ago by Disney execs, in which they tried to quell workforce concerns, answer questions, and elucidate their vision for how best to move beyond the unpleasantness and mediocrity of the last couple of years.
That forum was not public, but the media reports of leaked information suggest that the company’s management – and its CEO, in particular – remain somewhat confused about the problems facing Disney and the nature of the “misalignment” it is currently experiencing concerning its customer base. Bob Iger told employees that he knew there would be challenges upon his return to the company for a second stint as its Chief Executive and told his employees that he would very much like to start “building” the company again after a period of “fixing” it.
Unfortunately for Iger, Disney has two major obstacles to overcome before it can begin the process of building. It still has many issues to fix, two of which are seemingly intractable.
The first of these obstacles can be summarized in two words: Bob Iger.
Now, I know that Iger is considered Disney’s savior by many. He’s the guy who built the House of Mouse into an empire, and he is also, presumably, the guy who can repair all the damage that his hand-picked successor supposedly did in just two years at the helm. Don’t bet on it.
In many ways, deposed CEO Bob Chapek is a convenient scapegoat. He didn’t listen and made poor organizational choices and so on. But that’s all superficial. It’s all stuff that could be rectified easily. The real reason Disney is in trouble is Bob Iger and his inflated sense of purpose.
When the company talks about how it suffers from “misalignment with public and consumer tastes and preferences for entertainment” it’s referring – however obliquely – to the fact that it has, over the last several years, become embroiled in political tempest after political tempest, all of which put it at odds with its customers, who would prefer their entertainment content to be free of political proselytizing and badgering. That’s all on Iger.
In 2016, the Georgia legislature passed a “religious liberty” bill that was controversial and raised the hackles of various gay rights advocacy groups. Disney and Iger led the charge to block the bill by threatening to boycott the state if it was enacted. Also in 2016, Iger and Disney jumped into the political fray once more, signing on to the threatened boycott of North Carolina over its controversial bathroom bill, known as HB2. In 2019, Iger again threatened the state of Georgia, where it had produced the highest-grossing film of 2019—Avengers: Endgame—and the two highest-grossing films of 2018—Avengers: Infinity War and Black Panther. This time, the excuse was the state’s fetal heartbeat law, which would ban abortions after a fetal heartbeat could be detected. Small-r “republican” governance and the protection of the unborn were, according to Iger, bad for business.
And then there was Florida.
Generally, most observers assume that the dustup between Disney and Florida Governor Ron DeSantis was a Bob-Chapek-problem, given that the feud began on his watch. But that’s just not true. It doesn’t matter who the CEO was when the fight began, it was Iger’s fight all along:
Iger was sitting on the sidelines watching Florida lawmakers consider a new piece of legislation called the Parental Rights in Education bill. Critics had already labeled it “don’t say gay,” because the bill would prohibit classroom discussions involving sexual orientation and gender identity in early grades. The bill seemed to have little to do with Disney’s theme parks in Orlando. Still, Disney’s army of lobbyists in Florida kept an eye on the legislation.
The risk to Disney appeared so remote that top executives at Disney’s headquarters in Burbank, Calif., were still in the dark about the issue, according to a person familiar with the company’s thinking who spoke on the condition of anonymity to disclose corporate discussions.
“It was on no one’s radar,” said this person.
Then, on Feb. 24, 2022, Iger tweeted.
“If passed, this bill will put vulnerable, young LGBTQ people in jeopardy,” Iger wrote.
Iger’s tweet caught many in the Florida government and Disney’s headquarters by surprise. It suddenly set in motion an epic clash between two Florida powerhouses — Gov. Ron DeSantis (R) and Disney World, an economic engine that employs 75,000 people and attracts 50 million visitors per year. This dispute began with a contentious education bill, but, like a Magic Kingdom roller coaster, has taken numerous twists and turns in the past 15 months, picking up speed and intensity along the way.
In short, one of Disney’s two major problems is that it has become overtly embroiled in politics. And it has done so specifically because of Bob Iger. To move beyond the political, therefore, and to realign itself with its customers, it must also move beyond Iger.
The second intractable obstacle facing Disney can also be summed up in two words: it’s Disney.
Disney is not just another entertainment company. It is, rather, a company that proclaims itself the creator and redeemer of dreams. As I noted in The Dictatorship of Woke Capital, “Disney sells an image—’the Happiest Place on Earth,’ ‘Find your happily ever after,’ etc.—that evokes what is best about the country, about its history, and the idea that anything can happen ‘when you wish upon a star.’” All of this places Disney in a unique and often enviable position, but one that carries certain responsibilities.
Since the dawn of time, man has told stories. And at least since the start of recorded history, man has told – and written – fables. Fables, along with parables, are stories that teach moral lessons. They are the means by which children in particular are taught what matters in a particular civilization. They are the means, in short, by which the values of a civilization are transmitted from one generation to a next.
Jesus and Cicero didn’t tell parables because they were crazy old codgers who liked to see people’s reactions or hear their laughter. Aesop didn’t tell fables because they made him feel warm and fuzzy inside. All of these people – and countless others, of course – told these tales and pushed these morals because they mattered, because this was, is, and ever shall be the best means by which to inculcate every generation with the ideas, values, and norms that matter to a society. As Aristotle and C.S. Lewis remind us, the little human animal must be taught the virtues that are important. For if he is not, he will not develop those virtues and he will never understand, much less enjoy the good life.
Thirty years ago, the venerable professor of political science (and an old friend), Claes Ryn penned a piece titled “The Humanities and Moral Reality,” in which he made the case that this type of storytelling, this means of teaching virtue was the most important of all acts in the preservation of a civilization. Ryn argued that the most important warriors in our fight to preserve our society and our civilization are the people who “draw us into their way of experiencing the world,” the nation’s artists, authors, entertainers, and advertisers. He patiently explained that an individual’s view of the world is shaped to an enormous degree by the artistic symbols to which he or she is exposed. Some such symbols strengthen character and imagination, and in doing so promote a keener sense of reality. Others, by contrast, destroy character and weaken an individual’s ability to reason.
This, Ryn said, explains why some people seem to cling so tenaciously to economic and social doctrines that have been discredited time and again by both experience and theory. There is, of course, no end to examples of this phenomenon. Common cases in point include insistence by many people on higher and higher taxes, despite overwhelming evidence that nations with moderate tax rates are more prosperous than those with very high rates; resistance to real welfare reform, despite overwhelming evidence that the program has become highly pernicious for many of the very people it was designed to help; and support for educational policies that overwhelming evidence demonstrates are directly responsible for the decay the system has suffered over the past several decades.
This strange behavior isn’t necessarily a function of low intelligence, Ryn said. “In this century alone,” he added “one can point to many individuals of obvious intelligence who have spoken foolishly on some subject. A number of Nobel prize winners come to mind who have combined genius in some field with naiveté in others.” And it certainly isn’t that the practical arguments in their favor are decisive. The explanation, Ryn said, lies in the framework from which people view things. And this framework is dictated not by politics, but by art, music, literature, television, movies and advertising; by the symbols that inspire and shape the public’s imagination and its dreams for the future.
The article in which Ryn set forth these ideas does not offer specific examples of the enormous social, and ultimately political, power of literature and the arts. But such examples abound in world history. Obvious ones include the Old Testament stories of Abraham, Ruth, Esther, Job, Jacob, David, Noah, and of course, Adam and Eve, which have profoundly shaped the very nature of Western society. Erasmus’ great satire, Praise of Folly, did as much to erode respect for the local hierarchy in the medieval church as did Luther’s Ninety-Five Theses. Shakespeare and Milton changed the way the world thinks about conflict and love and honor and God. Voltaire and Rousseau can take as much responsibility for the French revolution, which changed the Western world forever, as the actions of Louis XVI or Marie Antoinette.
In more recent times, Harriet Beecher Stowe’s novel Uncle Tom’s Cabin also comes to mind. It had as much impact on the debate over slavery, and probably influenced the resort to war, more than all of the debates in Congress combined. Steinbeck’s Grapes of Wrath and In Dubious Battle had an enormous impact on the way millions of Americans viewed both the American labor movement and the early liberal agenda. Leon Uris’s Exodus affected the attitude of untold Christian Americans toward the new state of Israel. And many of the most vociferous opponents of the death penalty still cite Camus’ Reflections on the Guillotine, as having changed their lives.
Disney is, by its founder’s intention and by his successors’ purposeful safeguarding, an integral part of this tradition. Disney made its name as the re-teller of fairy tales, the modern adaptor of the Brothers Grimms’ collection of folklore and other folk wisdom. The company has always been, for better or worse, in the business of passing lessons down from one generation to the next, of inculcating its audiences with the values and virtues deemed worthy of preservation.
Over the last several years, of course, as it has become involved in political causes and has adjusted to modern moral sensibilities, Disney has been bestowing upon its audience a values tradition that is somewhat different from that which it historically bestowed. This is largely inarguable.
What this means is that Disney finds itself between the proverbial rock and hard place. Its values inculcation has helped bring it into “misalignment” with its customers, and yet it is a company that overtly and unabashedly embraces values inculcation. In order the rectify this problem, to “realign” itself with its audience, Disney would either have to stop producing values-laden stories and narratives, thereby abandoning its entire identity as a company, or it would have to start producing content whose values more clearly align with its customers’. Neither seems likely, to say the least.
Disney is, in other words, in a tough spot, and expanding its theme parks and streaming ESPN are not going to get it out of that spot. Disney and its executives, namely Bob Iger, chose to pursue a course of business mixed with politics and social commentary. Changing course now will be extremely difficult, and that assumes that the company even realizes that it must do so in order to survive.
